What to look for in an IPO

At Montgomery we recognise that making the right decisions on IPOs can have a big effect on performance. Looking at the incentives of the vendor and the circumstances in which they’re selling is one way to valuable insights into the quality of the float. At one extreme, if a vendor has steadily built a good business and a good reputation over a long period of time, intends to remain involved with it well into the future, is using the float proceeds to grow the business rather than exit, and has sensible remuneration arrangements in place, that could be grounds for confidence. If, on the other hand, the vendor has recently acquired the business, or assembled it from spare parts, is offering it at a price far in excess of what it cost them, paying management large one-off bonuses as part of the process, and intends to take the float proceeds and run, this could throw up a red flag. To find out what we look for in a listing you can read the full article here. (VIEW LINK)